Revamp Helps State Cope With Energy Demand

If there’s anything comforting for Californians wilting in the seemingly endless run of triple-digit temperatures, it’s that the kilowatt crunch of today has few forecasters talking about a market meltdown of the type the state endured in 2000-01.

“The major difference is that we know the monster that we’re dealing with. We can see it. It’s Mother Nature that’s really tasking us,” said Michael Shames, executive director of the Utility Consumers’ Action Network, a San Diego watchdog group. “For the first time, California can take solace in the fact that we’re sort of like everyone else in the country -- we’re no longer the poster child for bad energy planning.”

Although the state’s power system remains on edge -- and equipment failures left thousands without electricity Monday -- experts say California’s energy outlook has improved markedly.

In the five years since the market went haywire, with supply disruptions leading to rolling blackouts, California has boosted in-state and imported power supplies, expanded conservation programs and tightened rules to catch and penalize abuses in the power market.

The trouble is that those gains have been diminished by California’s ever-growing appetite for electricity, which is being fueled by a strong economy.

In charting the rapid growth in demand, planners point to development in the state’s hotter Central Valley, Inland Empire and high-desert regions. The trend toward larger houses there has sharply increased the use of power-hungry air conditioning, offsetting more-energy-efficient appliances and building design.

This week, the intense heat wave that has engulfed California and the West triggered electricity demand that surpassed anything envisioned by power authorities only two weeks ago.

On July 12, the state was said to have “sufficient resources to serve load [requirements] under a wide range of system conditions,” Yakout Mansour, chief executive of the California Independent System Operator, said in testimony before Congress. The agency manages 75% of the state’s electricity grid.

“We plan for the 1 in 10, and we should be OK with that,” said Gregg Fishman, spokesman for Cal-ISO, referring to conditions that might occur once in 10 years. “But we’re not looking at a 1-in-10 heat wave, I think we’re looking at a 1-in-50 heat wave.”

That heat sent power use on the Cal-ISO grid soaring Monday afternoon to a record high of 50,270 megawatts. That beat the record set Friday, but it was less than the 52,000 megawatts of total demand projected earlier in the day.

Folsom-based Cal-ISO does not manage power for certain municipal utilities such as the Los Angeles Department of Water and Power, which also reported record usage.

Within Cal-ISO’s service area, conservation and a Stage 2 emergency -- which kicked in a program under which customers agree to trim power usage -- helped California weather the heat storm. Conservation saved about 1,400 megawatts, while the voluntary interruptions shaved an additional 850 megawatts.

The state also benefited from the fact that an unusually low amount of power was unavailable, officials said. And it was lucky, consumer activist Shames said, that no power plants went down and no major transmission lines got tripped up by mechanical problems or brush fires.

“We’re calling in all the favors and using every chit that we have to keep the lights on,” Shames said. “But it’s still dicey. We have no margin for error.”

Even so, California’s power grid is holding up better than it did in the energy crisis of 2000-01 despite a 40% jump in peak demand, say state power officials and private electricity generators.

“The peaks that we’re seeing now are way above the peaks that we were seeing during the energy crisis,” said Debra Reed, president of San Diego Gas & Electric and Southern California Gas, both subsidiaries of San Diego-based Sempra Energy.

The system is stronger, she and others say, because the state has increased its generating capacity by about 7,000 megawatts, enough to run 5.25 million typical homes in Southern California.

“The existence of new electricity generating plants and the energy to fire them helps us avoid rolling blackouts,” said James Sweeney, a Stanford University economist who studies energy issues.

The California Public Utilities Commission now requires the state’s big investor-owned utilities -- Southern California Edison, Pacific Gas & Electric and SDG&E; -- to sign long-term power contracts and line up supplies at least one year in advance.

The switch to long-term contracting, instead of relying on the expensive spot markets for emergency power, as the utilities did in 2000-01, is boosting guaranteed supplies and keeping prices under control.

California’s move away from the volatile spot market has left the utilities less vulnerable to the threat of being manipulated by unscrupulous traders. During the energy crisis, traders at Enron Corp. and other private generators withheld power from the market to create false scarcities that led to high prices and rolling blackouts.

“Now, we have inspectors at the power plants that are down, vouching that they are down for true reasons,” said Michael R. Peevey, president of the PUC.

Joseph Kelliher, chairman of the Federal Energy Regulatory Commission, said Monday that his agency was better equipped to police energy markets.

He noted that spot market prices for power in California, which jumped 61% last week to an average of $97 a megawatt-hour Friday, “seem to be consistent with the supply-and-demand market fundamentals.”

The experiences of the energy crisis, though painful at the time, have helped policymakers, grid operators and customers to deal with spikes in demand, said Dorothy Rothrock, vice president of the California Manufacturers and Technology Assn. in Sacramento.

“Since the crisis, we have a more robust system of handling blackouts and interruptions,” she said. “Companies are more aware of how to respond, and the ISO is doing a good job of keeping people aware of what to do.”